Same-sex Marriage Ruling and Your Employee Benefits

In June, the Supreme Court ruled that same-sex marriages are valid and should be performed throughout the United States.

While the ruling in the case of Obergefell vs.Hodges is about personal liberties, it also will have an effect on employers’ employee benefit plans – and you need to know how to respond.

First, in its ruling the court did not touch on sexual orientation discrimination in the workplace. As a result, the decision does not require employers to treat the same-sex spouses of their employees the same as opposite-sex spouses with respect to the provision of health and welfare benefits.

That said, though, despite not addressing those issues, the case will require that employers make changes to their employee benefit plans. There are a number of factors for you to consider if you already offer your employees and their spouses benefits.

Expanding eligibility

If you were not previously offering same-sex spouse coverage, you may wish to offer an off-anniversary open enrollment for any employee with a same-sex spouse to now add various health and other welfare benefit coverage. This is likely to affect a number of your benefits offerings, including health, dental, vision, dependent life or voluntary benefits.

In other words, any benefits normally offered to a spouse, as well as coverage for any children of a spouse, should be extended to same-sex couples. You should review your plan documents and insurance policies to determine if same-sex coverage jibes with their existing verbiage or whether you need to include new wording in order to extend coverage.

Additionally, you may want to revisit your employee handbooks, benefit guides, enrollment forms, and other materials that you typically give to employees or new hires. Make sure the current wording in those documents properly communicates your benefits options and that they can apply to same-sex spouses if you offer family coverage.

Since the court case was not about benefits, but did in effect allow same-sex couples in all states to marry immediately after the decision, employers rightfully want to know when they should make changes to their benefits plans.

Benefits advisers recommend that if you are already offering family and spouse coverage via your employee benefits plans and you plan to extend the offering to same-sex spouses, you should consider the following:

When you want to start the new eligibility for same-sex spouses. You can either start immediately or pick a date in the near future.

When can employees begin to enroll? You may need to check with us to see if your current health plan carrier will allow open enrollment for an expanded eligibility of same-sex spouses and their offspring, if any.

Do you need to change any of your documentation?

Other considerations

Besides changes to your health plan, you have to consider other changes to your benefits offerings, as well as other administrative issues.

Taxes – As a result of the ruling, states must treat all spouses the same for tax purposes. That may require you to make changes in how you report benefits for same-sex spouse. In essence, the ruling should result in less administration on your part since a same-sex spouse will be treated the same as a spouse of the opposite sex. This is especially important if you have been offering domestic partner benefits.

Not extending coverage – The Employee Retirement Income Security Act of 1974 gives employers a wide berth in deciding whether to extend benefits to same-sex spouses. But going this route can set you up for headaches in the future, especially if you’ve been offering benefits to opposite-sex spouses up until now. There are legal implications, like being targeted in a lawsuit by employees in same-sex marriages.

Although the Supreme Court has not addressed whether offering health coverage only to opposite-sex spouses constitutes impermissible discrimination, some state laws may prohibit employers from discriminating with respect to the provision of employee benefits.

It’s best not to be the employer whose case sets precedent in this arena.

Domestic partner benefits – As gay marriage was already the law in a number of states before this decision, many employers have eliminated domestic partner benefits, which they extended to employees who were legally barred from marrying in the past.

But this benefit could still prove useful since there are individuals who are cohabitating with a partner and who don’t want to get married. If you do decide to do away with domestic partner benefits, you should give your employees notice that they will be phased out over a certain period (like between now and the next open enrollment).